BEIJING: China, set to overtake the United States as the world’s largest carbon dioxide emitter, will soon set up Asia’s first carbon-credit exchange in Beijing, allowing the country a head-start in the multi-billion-dollar global carbon market.
The exchange and 12 brokerages in western China, estimated to cost $1.7 million over three years, will be established with financial backing from Arcelor Mittal, the world’s largest steelmaker, which is scouting for major forays into China.
The project aims to establish the clean development mechanism (CDM) technical service centres in 12 provinces, Xinjiang, Qinghai, and Inner Mongolia being a few. These centres will act as brokers between international investors and local partners to kick-start ‘green’ investment in China’s less-developed regions.
The initiative aims to pilot carbon trading in China, build capacity and provide policy input for the expansion of carbon market and reduction of greenhouse gas (GHG) emissions in China, United Nations resident coordinator and United Nations Development Programme (UNDP) resident representative in China, Khalid Malik said.
“Assisting China in its efforts to cope with the impact of global climate change and to create more sustainable, less GHG-intensive development paths is an important focus for UNDP. A range of market-based instruments has now emerged to support this effort, with carbon trading emerging as a major opportunity,” he said.
Carbon trading, through the CDM, is one of the ways through which developed countries can meet their obligations of reducing GHG emissions under the Kyoto Protocol by investing in GHG emission reduction projects in developing countries.
Carbon credits are used to encourage companies to reduce pollution. The credits, each representing a tonne’s reduction of carbon dioxide emissions, are sold to buyers that exceed limits, experts said.
China now supplies over 1/3 of carbon credits to the global carbon market established under the CDM. Currently, however, there are few efforts in place to ensure that “carbon credits” are used to benefit the poor, as ongoing CDM projects often focus on “end of pipe” solutions, by, for example, reducing GHG emissions caused by chemical industry process. Many do not lead to technology transfer or foster the development of clean energy in China.
The ‘MDG Carbon’ initiative, by contrast, will use carbon trading as a tool to generate income for impoverished communities in China’s western region by increasing investment and job opportunities through promoting “green” industry. It is part of a global drive to achieve the Millennium Development Goals (MDGs), a set of internationally recognised targets aiming to eradicate poverty and ensure sustainable development by 2015.
“The XIth Five Year Plan of China sets an energy conservation target of reducing 20% of energy consumption per unit GDP by 2010, along with targets for greatly increasing use of renewable energy by 10%. We hope CDM projects can contribute to achieve these ambitious energy goals,” vice-minister of Science and Technology Liu Yanhua said.